Barron's Summary: Positive on PAYX, AAL, CA, COH, PCAR, PYPL; Cautious on AAPL
Cover story: Positive on F, CAT, GE, PG, MCD, INTC, IBM, MRK, DD, BLK, NVS, JPM: With growth stocks in favor this year, many blue-ship stocks that have languished now offer yields of 3% or 4%. Investors have also punished industry groups, such as basic materials, and industrials that have significant overseas exposure; Stocks as measured by the S&P 500 arent cheap by historical standards at a current 16 times forward earnings, but they arent expensive either.
Tech Trader: Cautious on AAPL: Tiernan Ray says that chief Tim Cooks candor, something Steve Jobs lacked, may be ill-advised because it can be seen as an attempt to appease Wall Street, raising the question of how much time corporate executives should spend pandering to the demands of richly awarded investors.
Trader: Peter Jankovskis, co-chief investment officer at Oakbrook Investments, says market volatility wont go away until the Fed makes an interest-rate move; Positive on PAYX: Investors may be viewing the company too harshly, since demand for its service is increasing and it has defensive characteristics that will be seen more favorably as markets stabilize; Positive on XLE, IXC, IYE: Exchange traded funds that hold large-caps are a diversified way for patient, long-term investors to play the eventual recovery in crude.
Features: 1) Chinas stock market could tumble another 15% before it hits bottom, but it may not be a good time to swoop in and buy, because if historic price-to-earnings multiples are any guide, Chinas rout has yet to run its course; 2) Positive on AAL, CA, COH, PCAR: Shares of these four companies have taken a hit lately, and are down more than 10% this year, but they offer double-digit returns on invested capital and sell for low price/earnings ratios, suggesting theyre stronger than Wall Street gives them credit for; 3) Positive on HCA, DHI, GOOG, MAS: Stocks could perform well in the coming months, partly because theyre not overly tied to Chinas problems, with Google looking strong after a recent selloff; 4) Positive on PYPL: Payment company still has a number of opportunities for growth, and should be able further expand in areas such as remittances, shared networks, and back-office servicing for companies such as AAPL.
Profile: Kevin Smith, founder and chief investment officer, Crescat Capital, which has benefited from bets against oil futures, energy companies, master limited partnerships, and biotechs (picks: SBGI, NXST, CNC, MOH; pans: EWA, WBK).
Interview: Felix Zulauf, president, Zulauf Asset Management and partner at Vicenda Asset Management, says that stocks will undercut this months lows in the next wave of selling.
Follow-Up: Positive on GOOG: The strength of YouTube is but one reason the stock could see 20% upside; BX founder Stephen Schwarzman was among several high-profile traders who predicted that a crunch would arise from higher costs resulting from restrictive new global bank rules.
European Trader: European stocks have taken a hit because of fears about China, creating an opportunity for investors looking for value and attractively priced equities.
Asian Trader: China needs more domestic consumption, but reforms that could make that happen appear unlikely, and the countrys leadership seems in disarray.
Emerging Markets: Emerging-market assets are cheap amid all the turmoil in China, and the sector may not have hit bottom yet; Audrey Kaplan of Federated Investors likes markets that are tapping developed-world strengths.
Commodities: Iron ore, which has already been battered, is likely to keep falling as supplies rise and China is unable to consume the extra inventory.
Streetwise: Even if a Fed hike is postponed, the fact that far fewer folks are expecting one means that financials no longer are priced for that possibility.